Sun introduces first Intel servers

Santa Clara (CA) – No, that is not a misprint in the headline. Sun in fact today announced what seemed impossible until a few months ago – a server with a processor from the company it loved to hate.

Today’s product introduction follows a joint announcement the two companies made earlier this year. It is first step towards a “complete” line of Xeon-based 1P, 2P, 4P and 8P servers. Sun’s debut Intel product is the Blade 6000, a blade server that can be ordered either with Sun’s own UltraSparc T1 processor, AMD Opteron Rev F CPUs, or Intel Xeon dual-core or quad-core processors.

Available are the T6300 server module, which is a 1-socket blade for the UltraSparc T1; the X6250, a 2-socket blade for Xeon CPUs and the X6220, a 2-socket blade for Opteron processors. Offered in combination with the company’s 10 RU chassis, the 6000-series can hold up to ten blades and up to 320 cores per chassis and a total of 2.5 TB of memory.

Pricing for the new Intel blades start at $3700 for a blade that uses one 1.86 quad-core Xeon CPU (E5320) and 2 GB of memory and reach to $26,000 for a system with two 2.66 GHz quad-cores and 32 GB of memory. Sun offers only one Xeon dual-core configuration (3.0 GHz) with 8 GB of memory for $6600.

The AMD-based X6220 series is positioned at lower price points: The series starts at $4000 for a 2P 2.0 GHz system with 4 GB memory and tops out at $8400 for two 2.8 GHz processors and 16 GB of memory. T6300 servers, which are the first available UNIX blades, represent the higher-end and are priced at a premium: A 6-core 1 GHz chip with 4 GB of memory rings in at $6000, while the most expensive blade, a 8-core 1.4 GHz chip and 32 GB of memory, costs $42,000.

Sun is very careful about being too vocal about the positioning of the individual processor brands within the 6000-series. We were told that it is “choice” Sun’s customers care about and the company was reacting accordingly. But with three different processors now being available, which processor does Sun recommend for which application? In most scenarios, customers will make their decision based on their application needs and independent from Sun’s advice, but it is interesting to note that Sun does not recommend one processor over the other: “We are not positioning one processor as superior over the other,” said Mike McNerney, director for Sun’s blade server product line.

However, there is no denying that quad-core servers have become a sought after product in the growing x86 market – a segment that is increasingly important for Sun and that is already strong enough to offset declines in the enterprise and data center server segment for the company. Thanks to AMD and its Opteron, Sun was able to grow its server business, but it is also Opteron that created a strategic problem for the company: The fact that AMD still has not announced its Barcelona quad-core Opteron put Sun at a disadvantage against competitors who offer x86 quad-core servers, including Dell.

A quick look into market share data reveals that the jump into the x86 server segment enabled Sun to reverse a downward trend in shipment numbers and revenues between 2001 and 2005, according to Gartner. For 2006, the company posted a 15.4% server revenue growth - well ahead of the industry average - to $5.7 billion and a market share of 10.8%. Shipment numbers were up 7.6% to a total of 368,000 units. In the first quarter of 2007, which generally has been considered as a quarter were quad-core processors were available and began outselling dual-core counterparts, Sun’s annual revenue growth declined to 2.2%, roughly half of the industry average.

IBM, HP and Dell were able to outgrow Sun during the first quarter with 8.4%, 5.4% and 10.3%, respectively. To be fair, it isn’t clear how much Sun’s x86-server sales were impacted in Q1 as the company does not break out individual server segments in its balance sheet; however, Gartner mentioned that worldwide x86 server sales “had been constrained in the fourth quarter of 2006 due to the lengthening sales cycles, following a period of particularly rapid technology transition.”

With Intel in the portfolio, Sun not only catches up to the competition in terms of performance: The company may also be able to negotiate better pricing for the processors. It is no secret that AMD was able to charge high prices for its Opteron processors while Intel’s Xeon products were trailing in performance and power consumption; Sun was locked into those prices with little opportunity to bring the prices down when Intel began rolling out competitive CPUs in products from companies such as Dell. The fact that Sun, the world’s fourth largest server vendor, now offers two competing processors in virtually the same product, changes the playing field and is expected to enable the company to get better deals on x86 processors.